NINL disinvestment progresses without any delay; govt receives multiple EoIs

• The government had floated a PIM on January 25, and had sought EoIs for the disinvestment of 100 percent shareholding of various state-run organisations in NINL

• The shortlisted bidders would be required to quote for NINL on an enterprise value basis

New Delhi: The disinvestment of state-run Neelanchal Ispat Nigam Ltd (NINL) has entered the next stage without any delay or postponement as the deadline for the submission of Expressions of Interest (EoI) closed on March 29 with multiple bidders showing interest in acquiring the government's stake in the steel PSU. In a tweet, Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey said, "Multiple expressions of interest received for privatisation of Neelachal Ispat Nigam Ltd (NINL). The transaction moves ahead to the second stage, on schedule."

The government had floated a Preliminary Information Memorandum (PIM) on January 25, and had sought EoIs for the strategic disinvestment/privatisation of 100 percent shareholding of various state-run organisations in Odisha-based NINL. The last date for submission of physical copies of EoIs submitted electronically is April 5.

Bidding to take place on enterprise value

The shortlisted bidders would be required to quote for NINL on an enterprise value basis which would be payable upfront, said DIPAM. The amount payable by the successful bidder would be applied (on a priority basis) towards the settlement of labour dues, operational creditors, commercial lender debt, promoter debt and purchase of 93.71 percent of shareholding of NINL as per a pre-determined waterfall mechanism.

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Enterprise value shall mean combined value of debt and equity of NINL as assessed by the bidder in its financial bid, said DIPAM.

Two-stage bidding process; employee consortiums can bid

The bidding process for strategic disinvestment of NINL will be a two-stage process. In stage I, EoIs will be evaluated on the basis of eligibility criteria and disqualification conditions detailed in the PIM. In stage II, the shortlisted bidders will be provided with Request for Proposal (RFP) / Definitive Agreement(s) through the data room/ e-mail to review documents pertaining to NINL and would be required to undergo a transparent bidding process. The interested bidder should have a minimum net-worth of Rs 2,000 crore.

While government companies will not be allowed to take part in the disinvestment process, employee consortiums can.

The backdrop

NINL has a complex shareholding pattern with MMTC holding 49.78 percent share and the Odisha government at 32.47 percent. The rest of the shares are held by NMDC Ltd, IDBI Bank, MECON, BHEL and Odisha PSUs IPICOL and OMC. For FY22, the government is looking to raise Rs 1.75 lakh crore through PSU disinvestment. In view of the Covid-19 pandemic, the government has revised the disinvestment Budget estimate for FY21 to Rs 32,000 crore, down from Rs 2.1 lakh crore.

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